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Thread: China-Building HX Italian Esp Machines-Cheap

  1. #1
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    China-Building HX Italian Esp Machines-Cheap

    Gene Cafe Coffee Roaster $850 - Free Beans Free Freight
    Dear snobs,

    Your opinions re a story I heard yesterday re the price of HX / pro machines...

    An italian buisness friend was telling me recently in Milan, italy ,he was reading a local trade magazine, he travels to Milan monthly for trade meetings etc, and is also a coffee lover as you would expect, he read that a few of the larger well known italian manufacturers, paper didnt say who but there are a few there, ECM, Isomac, elekta etc etc

    He was born in Milan so knows the city and people and business there well,

    He said the italian manufacturers have made quite a few trips both to China and Vietnam with a view to getting part or all of the machines/range manufactured there. One of the factories in China is currently quoting on a total manufacture price from a machine they have been given by the company.

    And one company had a rep from china visit the local factory, much to the horror of the local italian workers apparently..

    The big question of course is quality, but the chinese company has already offered a guarantee that for the right price they will make to the same standards as the machine in front of them. And double the 12 month guarantee to ensure they win the job/quote.

    And get this-for 1/3 rd of the price that its currently manufactured for !!!

    1/3 rd. I said what about chinese quality etc, but he said that was already allowed for, in the price, they can do it cheaper apparantly for about 1/4 of the current price, but putting in full quality quantrol and machinery even though it adds to the price it is still way cheaper.

    Im sure tradition must eat away at everybody, but really if say a Giotto ECM was available for half the price with a 2 year guarantee rather than a one year guarantee and it came from china, would the average jo care ??

    Plus sales would go right up if say in australia you could buy as Giotto (example only) for $1200.00 australian.. with 2 year warranty.. and the company still gets the same margin of profit plus more sales. !

    Anyway, just thought I would pass it on. My friend said that Milan etc is very proud city. and tradition etc, and would hate this but money will rule in the long term if the quality is there.

    Look at manufacturing in australia, so much is moving oseas as the price is too hard to beat.

    This chap is in manufacturing and said LG have killed many companies margins, im told in the area of washing machines, tvs ,mobile phones etc. They have hit maytag, nokia, fisher pykal very hard, but offer 3 year warranties on washing machines and 1/3 cheaper than other machines were a year ago till they lowered their prices to match..so if korea can do it to these industries can china do it to italian espresso machines.

    Does anyone have any more knowledge/info of this happening ?

    The lower end shop models. such as sunbeam do it for amazing prices now, I guess there is no reason to not see it move up the line.

    Is all this good for coffeesnobs, ?? being cheaper machines, and a fact of life or is it a more a loss of tradition. I keep harking back to the quality of the machines but I am told that it really is less of a problem than it used to be and china etc make some very high end components and equipment anyway.

    Has this already started ??

    anyway love any industry chat and opinions ??

    cheers

    marc

  2. #2
    Super Moderator Javaphile's Avatar
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    Re: China-Building HX Italian Esp Machines-Cheap

    I havent heard anything specifically about the espresso industry but China has done it in virtually every other area of the manufacturing world so it would not surprise me.

    Its hard to compete with a company that pays its workers less for a weeks work than is paid for an hour of work in the US/AUS/Europe, and this is at one of the highest paid companies in China.

    The manufacturers in China are now fully capable of manufacturing products to any standard, and they can do it at a price far below anything we can match due to the low wages paid their workers.

    Many of the Italian espresso manufacturers moved their facilities to Spain years ago due to the lower manufacturing costs there (mainly wages), it should come as no surprise that theyll move thier manufacturing facilities to yet another country for the same reasons.

    Java "Welcome to the Global Economy" phile

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    Re: China-Building HX Italian Esp Machines-Cheap

    I think, for the consumers it is good. Same quality equipment at much reduced prices. It is bad for the Italian workers as they are going to lose their jobs. Some gain employment while some lose employment, I guess. The developed contries have been (comaretively) swimming in money since WWII, while other countries have been suffering. Now people in those less fortunate countires are taking a bit of what they should have been part of all those years.

    Itll work itself out.

    I would buy an ECM Veneziano A1 in a heart beat if it was half the price. Stuff the Giotto then, go straight for the more expensive stuff. ;D

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    Re: China-Building HX Italian Esp Machines-Cheap

    I am surprised it hasnt happened already.

    Mind you the move to fewer jobs and less money for us people in wealthy countries is already well under way.

    It is our kind, christian, giving ethos that will make us all part of a global sweat shop. The italian workers will be the next to be brought onto the global team!

    Mind you if the italian companies dont do it then the chinese will clone the machines and sell them cheap anyway, sooner or later.

    Look on the bright side, we can get our coffee machines cheaper and we will be helping the chinese economy!

    Grant

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    Senior Member fatboy_1999's Avatar
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    Re: China-Building HX Italian Esp Machines-Cheap

    One thing to keep in mind with this sort of situation:
    The cost savings are not always passed on to the consumer.
    These manufacturers might reduce their build cost by 60%, but they might only reduce the final unit cost by 10% (or nothing).
    Its all about the bottom line and if they believe they have a sustainable market at the current price, then they will not really see a need to cut the retail price of these units (or not by much anyway).
    Businesses are never doing this for anyones benefit but themselves. If we happen to get cheaper prices along the way, thats just a by-product.

    Different industry I know, but this kind of reminds me of a story of an IT service provider a few years back.
    The company in question provided support to many other companies.
    The management did the numbers and decided that they could do a large % of their support work out of India as it was cheaper. However, they kept charging the same rate to their customers.
    The customers were less than impressed and many told them "You pass the savings on to us, or we go somewhere else".
    In the end, they pulled of out India and went back to their previous methods.

    So.. with regard to cheaper machines, I think it will only happen if the Accountant :-/ in their company has a spreadsheet and a lovely graph that tells the bosses that reducing the sell price will end up making them more money by increasing their number of units moved.
    Seasonally adjusted, and looking at this from a helicopter view, we can then look at the big book of management cliches and move forward, not backwards, upwards, not forwards and always twirling, twirling, twirling towards freedom!

    Message ends!

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    Re: China-Building HX Italian Esp Machines-Cheap

    With an increased profit margin, itll only take one manufacturer to lower prices and a price war could ensue.

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    tim
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    Re: China-Building HX Italian Esp Machines-Cheap

    Quote Originally Posted by fatboy link=1124638270/0#4 date=1124672234
    Seasonally adjusted, and looking at this from a helicopter view, we can then look at the big book of management cliches and move forward, not backwards, upwards, not forwards and always twirling, twirling, twirling towards freedom!

    Message ends!
    ;D :D ;D

    ....now that Ive picked myself up off the floor from laughing.
    Jeez Brett; it looks like youve worked in some of the same places I have!!
    These buggers all love "Systemanalyse und Programmentwicklung" !!
    ;)

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    Re: China-Building HX Italian Esp Machines-Cheap

    Ive had a few emails of people re their expertise dealing with China, and one from an aussie guy there having equipment made for a major whitegoods company. He had amazing prices he quoted for various things. Some goods were made for such amazing prices. ie front load washing machines that retail here for $799.00 made for $220.00 . With 3 year warranty.
    Being coffee heads they were very interested in the topic.

    One gave me a rough price of a common machine the ECM Giotto premium, he said depending on the amount ordered, in order to tool up the factory etc, a bulk order with a long term supply contract that the giotto would be made for something like $400-$700 australian dollars.

    This is his guess only, but having lived for for 5 years and doing this daily he said it would be close to the mark. If anything he said he is quoting heavy to be safe.

    While that seems low he said you need to order 1000 or more units to get the tooling paid for, but seeing as the moulds and tools were already made for these machines the equipment could be taken from italy quite easily and moved to china very quickly and the cost per thousand would/could be slightly cheaper still.

    Now this is just an estimate, and of course you have marketing, shipping, customs, profit, retailer margin, wholesaler margin etc etc etc,

    but gives you an idea of how much room to move their would be.

    He said the minimal cost to the machine in china was labour. !!

    Plus he said any improvements the Chinese could make would be more or less thrown in to secure a long term contract. ! In that he said they country was very smart in manufacture and would find improvements they would like to make to the machines. ie second guage thrown in or added for 5 dollars or so .

    Moving up to the bigger models ie the ECM A1 adding another $200-300 or so dollars. and so on per each group added.

    makes you wonder how cheap they could churn out 3 group machines that currently retail for $8000 dollars or so ?

    he thought as a company director you can only ignore profits for so long, and if your privately owned you can resist all you like, but once your a public company, or listed its your duty as a director to find the cheapest most efficent way to source the product that your company makes.

    Another example he gave me was cars, his friend sources supplies and contracts for parts for a major car comapny in australia. Central locking for example on your car as an extra on a base model cost about 200-300 extra. Via the factory floor the cost including components, installed, is about $30. Now thats amazing.

    maybe the small italian firms will stay strong. But for how long !!

    cheers


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    Re: China-Building HX Italian Esp Machines-Cheap

    It wont be long before the Chinese will simply make OEM 1st class espresso machines.

    Who needs a name brand when you have some sort of generic machine that delivers comparable quality to the more expensive Italian branded machines?

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    Re: China-Building HX Italian Esp Machines-Cheap

    nunu

    thats very true,

    america has the quickmill for $1300 australian, which I guess is a generic 61 HX machine, but still a brand with its cut added etc.

    Im sure the chinese could sell one for $700 or so whenever someone gets around to it. No brand of course, but as you say gives you perfect espresso and hot water water a great price.

    Im a lover of the history etc and company brands and parts, and accept paying $2400 for a Giotto (example only) but im sure if the average joe could buy a chrome non branded machine for his bench for $700 they would sell tons.

    Bunnings did it here with many goods, ie barbecues for $99.00 that used to cost $300.00 ten years ago.

    imagine what price they would source/sell a cloned chinese HX machine for ??

    of course lots of small hardware shops have closed as they cant compete but it does show what lies ahead.

    plus shops such as bunnings, even though most of the store comes from china have a great return policy. If it stops working within 12-months bring it back.

    Plus HX machines/clones use generic parts ie pressurstats etc.

    cheers


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    Re: China-Building HX Italian Esp Machines-Cheap

    Even though there will be a huge market for the cheap generic machines, there will still be people who will buy the real deal.

    Look at every product that has a generic equivalent...People still buy the branded stuff, regardless.

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    Re: China-Building HX Italian Esp Machines-Cheap

    Is Taiwan close enough?

    http://www.kedgeklub.com/

    Theres a fellow in Hong Kong who does machine repairs / restoration who checked one out and seems ... content ... with the build quality.

    http://www.espresso-restorations.com/Kedge.html

    He says theyre using all industry standard valves/pumps/etc and locally developed controllers and doser electronics.

    Ive sent them off an email to see if there is an Aussie distributor yet and Ill see what I can find out about pricing and supply.

    p.s. First Post - Hi All!

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    Re: China-Building HX Italian Esp Machines-Cheap

    I wonder what a generic HOTTOP would cost?

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    Re: China-Building HX Italian Esp Machines-Cheap

    It might be more appropriate to ask what the Hottop would cost if it were built in Italy!

    Probably quite a lot more!

    Grant

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    Re: China-Building HX Italian Esp Machines-Cheap

    The cost of manufacture of a semi-commercial espresso machine in China VS the cost of the same in Italy, is not necessarily relevant to anything... Its the selling price that the Italian manufacturer places on his machine VS the same by the Chinese manufacturer....ie the margin any individual manufacturer is prepared to settle on, which then sets a price for an importer to purchase at etc. before he adds the cost of importation, and then he decides on a margin, or a "position" in the market, that he (she) wishes to pitch the equipment at. The cost of running business is important to all this ie what are the overheads etc.

    I would not therefore wish to be seduced by the idea that the ***starting****COST of manufacture of a machine in China is X dollars, because that is not necessarily of primary relevance.

    There is already (or has already been) an Austalian importer/agent for the Taiwanese manufactured Klubb commercial espresso coffee machine. It was being wholesaled here, for a HIGHER price than many "equivalent" Italian machines and as such met with some resistance...Indeed this could even have been as a result of HIGHER build costs, due to smaller manufacturing runs...

    Regardz,
    FC.

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    Re: China-Building HX Italian Esp Machines-Cheap

    The issue of economy of scale is an essential one FC and certainly companies will make whatever profit they can regardless of the cost of manufacture.

    The Hottop as an example would drop in price, in theory, if they could ramp up the units produced.

    A lot of these machines are a niche item and made in small production runs which makes them a lot more expensive to manufacture than you might think.

    Were used to the Harvey Norman appliance model and on that basis most of these machines should be less than half the price that they are.

    I think we just have to look at each item we buy and make our decisions based on the machines virtues and cost and not look at theoretically what the machine could cost. That is crystal ball gazing really.

    Academic...

    Grant

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    Re: China-Building HX Italian Esp Machines-Cheap

    Quote Originally Posted by brepro link=1124638270/0#11 date=1125113355
    Is Taiwan close enough?

    http://www.kedgeklub.com/

    Theres a fellow in Hong Kong who does machine repairs / restoration who checked one out and seems ... content ... with the build quality.

    http://www.espresso-restorations.com/Kedge.html

    He says theyre using all industry standard valves/pumps/etc and locally developed controllers and doser electronics.

    Ive sent them off an email to see if there is an Aussie distributor yet and Ill see what I can find out about pricing and supply.

    p.s. First Post - Hi All!
    Welcome aboard Brepro!

    They are both interesting links. I like the "espresso-restorations" site, plenty of good reading there for those with an interest of machine gizzards.

    Cheers,

    Andy.

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    Re: China-Building HX Italian Esp Machines-Cheap

    Behmor Brazen - $249 - Free Freight
    Do you think Miele would be any cheaper if they sourced 100% of their machines from China? May be they already do.

    Top end stuff that works is always going to have a premium, no matter where its made.

    As FC points out, a lot of the price doesnt have much to do with the manufacturing cost.



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